Product Substitution Fraud
Product substitution fraud occurs where a contractor supplies nonconforming material to contract requirements. The product could be used, outdated, not properly manufactured to specifications, or uninspected or untested per contract requirements.
The quality of the product is essential when choosing vendors. After winning the contract, the vendor must provide the level of quality it offered in its bid. Product substitution may include using inferior materials or supplying counterfeit or defective parts to increase profitability to the vendor.
Produce Substitution Whistleblower
A whistleblower is someone who reports improper conduct or illegal behavior, including product substitution by a contractor. At the federal level, whistleblower laws create incentive programs for product substitution whistleblowers by offering potential rewards of up to 30% of any recovery obtained by the government.
Schneider Wallace Cottrell Konecky has whistleblower attorneys that work on a contingency fee basis, meaning they do not charge their whistleblower client unless there is a recovery or award. This allows a whistleblower to hire an attorney to assist with filing a claim and collecting a reward, without having to pay upfront for time or expenses expected to share in any reward.
Product Substitution Schemes
Product substitution schemes include:
- False invoices
- Duplicate invoices
- Overbilling
- Diversion of payment
- Corrupt influence
- Conflict of interest
Product Substitution Examples
Examples of product substitution schemes include:
- False invoice: A false invoice that doesn’t accurately represent a purchase or sale.
- Non-delivered: The invoice is for an item or service that was never delivered or provided.
- Illegal benefits: The employee receiving the item illegally benefited from its use, but the government or company is billed the cost.
- Duplicate invoice: A company knowingly bills for the same service or good more than once, with the same agency or to multiple agencies. This can occur with or without the knowledge of an employee who is knowingly making duplicative payments for goods or services already delivered.
- Overbilling: Overbilling can include examples such as changing the amount of a good or the volume of a good to exceed actual delivery. This type of fraud can occur for both goods and services, such as overbilling hours worked. Overbilling can also occur if prices are intentionally set in the invoice higher than agreed.
- Diversion of payment: Payment for a good or service from a vendor that is directed to an employee’s control. This may or may not include an employee within payment processing who is part of the scheme.
- Corrupt influence: Rigging of the bidding process in favor of a specific vendor. Unfair allocation of contracts can occur if there are kickbacks, but other forms of future benefit for steering contacts can occur such as future employment opportunities or other opportunities given to the employee.
- Conflict of interest: A contractor is picked due to the employee having a financial interest in the vendor but does not disclose this interest. This is a conflict of interest whether or not any identifiable worse result in awarding the contract to the vendor can be quantified.
Product Substitution Whistleblower Lawyer
Schneider Wallace represents product substitution whistleblowers and companies injured by another’s fraud. Schedule a consult with our product substitution law firm for a free legal consultation.
To speak with a lawyer with years of experience handling both government whistleblower and contractor fraud cases, contact us at 1-800-689-0024 or info@schneiderwallace.com.